Retiring? You'll need $1m

Although it focuses primarily on the baby boomers - the 76 million Americans born between 1946 and 1962 - the index is one of many loud alarm bells in a rising chorus.

The alarm bells are encouraging not only boomers, but Americans in general, as well as other investors worldwide, to start planning for the future, to shift their thinking from current consumption and debt accumulation to savings and investing for the future.

As recently as 1980, Americans were in the habit of saving about 8% of their disposable income. However, in a relatively short 15 years, the savings rate had dropped to about half the 1980 level.

Americans must triple savings in order to retire

Today, we're only saving 4.5% of our disposable income. Moreover, that's only about one-third the savings rate of our major competition among industrialised nations.

Eventually this emphasis on consumption could impact not only individuals but the nation as a whole, creating a debtor nation short on investment capital.

Fortunately, the popular media and press have been accelerating their coverage of this shortfall lately.

In fact, hardly a week goes by without an article somewhere about the dire consequences, individually and nationally, of this enormous saving's shortfall.

When common sense isn't enough encouragement, fear tactics are always a powerful motivator.

What is happening to the baby boomers is also turning out to be a massive "wake-up call" to all Americans, including the GenXers who are turning out to be more responsible than early pundits predicted.

This new generation is becoming very aware of the need for savings very early ... and as a result, successfully focusing on long-term savings and investments.

Bottom line: Start saving now, become a millionaire

The message is loud and clear: Wake up and increase your savings. As incredible as it may seem, Americans must now become millionaires if they want to retire with an even modest lifestyle!

US News & World Report summarised it this way: "Merrill Lynch's just released 'Baby Boom Retirement Index', a fund of yearly dings on the heads of boomers, shows that most would have to triple their savings rate to retire at 65 without a severe decline in living standards.

Financial journalist Philip Longman, in his recent book, 'The Return of Thrift', called the behaviour of most of today's consumers 'slow-motion bankruptcy'".

If you want to retire, you'll need a million dollars in your portfolio ... thank God if you're already on the path, with a disciplined, systematic, monthly saving plan.